By Sharen Kaur
YTL Corp Bhd is increasing its investments in the United Kingdom (UK) to alleviate the impact of thinning margins from its power generation business in Singapore, analysts say.
According to them, YTL's power generation business in the city-state is facing slow growth due to stiffer competition in the wholesale electricity market as a result of various liberalisation measures introduced by the Singapore government.
YTL Power International Bhd (YTLPI), a unit of YTL, owns and operates some 5,500MW of gas-, oil- and coal-fired power generation plants in Malaysia, Singapore and Indonesia.
In Singapore, its subsidiary PowerSeraya Ltd is the second largest power generation company in terms of installed capacity, with a total licensed capacity of 3,100MW.
"The YTL management had indicated that it is relatively easy to manage costs in the UK due to low interest rate and a more structured regulatory environment. This is why we believe that YTL will increase its investments there," said an analyst from MIDF Research.
Business Times reported yesterday that YTL is scouting for more assets in the UK, including completed luxury boutique hotels.
An analyst from a foreign research house expects YTL's investment in the UK to focus on building its existing water and hotel assets, and venturing into the power business.
YTL currently has a 100 per cent stake in Wessex Water Services Ltd via YTLPI.
Its subsidiary, YTL Hotels & Properties Sdn Bhd, owns Gainsborough Bath Spa Hotel, which is scheduled to open later this year. YTL Hotels also owns Thermae Development Co Ltd, which it recently acquired for STG12 million (RM65.6 million).
"The last time we spoke to YTL in December, they said that Wessex Water will remain their core income generator from the UK, and that they will cover more water services apart from water supply and sewerage services," the analyst from MIDF Research said.
Wessex Water contributed about 15 per cent and 50 per cent to YTLPI's revenue and net profit, respectively, for fiscal year 2013.
YTL yesterday closed one sen lower at RM1.57 a share.
According to them, YTL's power generation business in the city-state is facing slow growth due to stiffer competition in the wholesale electricity market as a result of various liberalisation measures introduced by the Singapore government.
YTL Power International Bhd (YTLPI), a unit of YTL, owns and operates some 5,500MW of gas-, oil- and coal-fired power generation plants in Malaysia, Singapore and Indonesia.
In Singapore, its subsidiary PowerSeraya Ltd is the second largest power generation company in terms of installed capacity, with a total licensed capacity of 3,100MW.
"The YTL management had indicated that it is relatively easy to manage costs in the UK due to low interest rate and a more structured regulatory environment. This is why we believe that YTL will increase its investments there," said an analyst from MIDF Research.
Business Times reported yesterday that YTL is scouting for more assets in the UK, including completed luxury boutique hotels.
An analyst from a foreign research house expects YTL's investment in the UK to focus on building its existing water and hotel assets, and venturing into the power business.
YTL currently has a 100 per cent stake in Wessex Water Services Ltd via YTLPI.
Its subsidiary, YTL Hotels & Properties Sdn Bhd, owns Gainsborough Bath Spa Hotel, which is scheduled to open later this year. YTL Hotels also owns Thermae Development Co Ltd, which it recently acquired for STG12 million (RM65.6 million).
"The last time we spoke to YTL in December, they said that Wessex Water will remain their core income generator from the UK, and that they will cover more water services apart from water supply and sewerage services," the analyst from MIDF Research said.
Wessex Water contributed about 15 per cent and 50 per cent to YTLPI's revenue and net profit, respectively, for fiscal year 2013.
YTL yesterday closed one sen lower at RM1.57 a share.
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